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Question 1 of 10
1. Question
What is the difference between the brokers and the consultancy firms?
Correct
The consultant will advise the client with the payment of a fee but will not transact the business, whereas the broker will also transact the business
and the advice may be offered as part of the commission. The job of independent financial advisors is to advise on a range of financial decisions, ranging from mortgage to investments to audits to insurance purchase.Incorrect
The consultant will advise the client with the payment of a fee but will not transact the business, whereas the broker will also transact the business
and the advice may be offered as part of the commission. The job of independent financial advisors is to advise on a range of financial decisions, ranging from mortgage to investments to audits to insurance purchase. -
Question 2 of 10
2. Question
What is the speciality of the London market?
Correct
The London Marketis a specific market based in the City of London that specialises in reinsurance and large commercial and international risks, such as energy or aviation, large corporate companies and business that nobody else would insure. For instance, satellite risk was initially insured only in the London Market. To a large extent, the London Market specialises in complex business that needs to be negotiated face-to-face.
Incorrect
The London Marketis a specific market based in the City of London that specialises in reinsurance and large commercial and international risks, such as energy or aviation, large corporate companies and business that nobody else would insure. For instance, satellite risk was initially insured only in the London Market. To a large extent, the London Market specialises in complex business that needs to be negotiated face-to-face.
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Question 3 of 10
3. Question
What is the role of the first underwriter in the slip system?
Correct
The first underwriter is the lead underwriter and is usually someone who is known in the market as a specialist of the type of risk concerned and whose judgment is trusted by other underwriters.
Incorrect
The first underwriter is the lead underwriter and is usually someone who is known in the market as a specialist of the type of risk concerned and whose judgment is trusted by other underwriters.
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Question 4 of 10
4. Question
What do you understand by the term “soft market” and “hard market”?
Correct
When the market is hard for a particular class of business that is the insurance prices are high, there is an incentive for insurers to enter the market or to move into that class of business or underwrite more of it. The increased supply of insurance brings down the price. As a result, the market becomes soft and insurance prices become too low to provide an appropriate return on capital and lead to losses being made when the insurers start to exit the market.
Incorrect
When the market is hard for a particular class of business that is the insurance prices are high, there is an incentive for insurers to enter the market or to move into that class of business or underwrite more of it. The increased supply of insurance brings down the price. As a result, the market becomes soft and insurance prices become too low to provide an appropriate return on capital and lead to losses being made when the insurers start to exit the market.
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Question 5 of 10
5. Question
Why it may be more difficult for reinsurers to maintain profitability if no catastrophes happen?
Correct
Catastrophes lead to reinsurance premium increases and a surge is evitable in the reinsurance rates. In the absence of catastrophes, there is constant downward pressure on reinsurance prices and the market may slide into a loss.
Incorrect
Catastrophes lead to reinsurance premium increases and a surge is evitable in the reinsurance rates. In the absence of catastrophes, there is constant downward pressure on reinsurance prices and the market may slide into a loss.
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Question 6 of 10
6. Question
‘Loss’ and ‘Claim’ when meant two different things have different meanings, What is the difference between the two?
Correct
‘Loss’ is referred to as the insured’s loss and the ‘claim’ is the referral to the amount the insured claims based on the policy the insured has purchased.
Incorrect
‘Loss’ is referred to as the insured’s loss and the ‘claim’ is the referral to the amount the insured claims based on the policy the insured has purchased.
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Question 7 of 10
7. Question
Why claims are supposed to be revalued in data sorting by an actuary?
Correct
All claims need to be revalued to current terms, whether they are settled or not, and that the revaluation applies to the full incurred amount, not the outstanding amount only.
Incorrect
All claims need to be revalued to current terms, whether they are settled or not, and that the revaluation applies to the full incurred amount, not the outstanding amount only.
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Question 8 of 10
8. Question
What is the chain ladder projection technique in the pricing requirements for an actuary?
Correct
The chain ladder method is used by insurers to forecast the number of reserves that must be established in order to cover projected future claims by projecting past claims experience into the future. The chain ladder method works when prior patterns of losses are assumed to persist in the future.
Incorrect
The chain ladder method is used by insurers to forecast the number of reserves that must be established in order to cover projected future claims by projecting past claims experience into the future. The chain ladder method works when prior patterns of losses are assumed to persist in the future.
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Question 9 of 10
9. Question
Which out of these is the severe limitation for the burning cost model of pricing?
Correct
The burning cost method has some severe limitations which are as follows: Burning cost is purely retrospective, there is no reliable prediction beyond the range of experience, no reliable estimation of the aggregate loss distribution, Failure to discern frequency and severity trends.
Incorrect
The burning cost method has some severe limitations which are as follows: Burning cost is purely retrospective, there is no reliable prediction beyond the range of experience, no reliable estimation of the aggregate loss distribution, Failure to discern frequency and severity trends.
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Question 10 of 10
10. Question
A model is a simplified description of reality. What are the points to keep in mind whilst using a pricing model?
Correct
A statistical model can be defined as a mathematical description of the relationship between random variables or more formally as a collection of probability distributions, but it is only an imitation of reality. To always keep in check is to know that models are approximations and one should always be aware of their limitations.
Incorrect
A statistical model can be defined as a mathematical description of the relationship between random variables or more formally as a collection of probability distributions, but it is only an imitation of reality. To always keep in check is to know that models are approximations and one should always be aware of their limitations.